US automakers will finally get a $17.4 billion announced by the White House, reports The Wall Street Journal.

This rescue might well create more problems down the track. Certainly, it's no guarantee to fix a badly-run industry. The WSJ reports that the deal is a lot more lenient than the one that was going through Congress as it is less stringent in judging their viability

Bloomberg goes into more detail about the conditions for these loans. Under the terms of the plan, the loans will be called and the money will have to be returned if the companies can't demonstrate financial viability by March 31. Furthermore, paying off the Government's debt will take precedence over paying other debts.
The automakers will also have to provide warrants for non-voting stock, accept limits on executive pay, give the government access to financial records. And they will be allowed to issue dividends until the debt is repaid. The government will have the authority to block transactions larger than $100 million. The automakers will have to cut their debt by two thirds in an equity exchange, make half of the payments to a union retirement fund in equity, eliminate a program that pays union workers when they don't have work and have union costs and rules competitive with foreign automakers by December 31, 2009. The plans also gives Government officials the right to examine all financial statements and records of the car companies.

The question is whether the Government is actually tackling the real issue here. There are no guarantees this will work and it opens the way for a never-ending stream of subsidies for the auto industry with the politicians decided that bankruptcy is no option. Or more to the point, it would damage them politically.

I have to agree with Ben Mack;s assertion 0at Wired magazine's Autopia blog that bankruptcy would be the best way to ensure some sort of survival. "There's Bankruptcy, and then there's bankruptcy." Mack writes. "What we're talking about here is Chapter 11, which protects companies from creditors while they sorts out debts, renegotiate contracts and restructure their business. Chapter 11 helped turn many airlines into leaner, more efficient businesses."

The other big concern is the signal this, combined with the $700 billion bank bailout, might send out to other dysfunctional industries. Like housing? Do they get bailouts too?

As the 3BlueDudes site points out, the US Government seems to be ignoring one point: the problems confronting the Big Three come from bad management. "Isn't part of the competition problems the fact that our automakers simply have not put up the best ideas? Where were the American car makers on the hybrid market? Why did we miss out on that? Who was sleeping at the wheel? Throwing money at the Big Three without substantial changes in the management is just dumping money into bad ideas."